Hotels Express Uproar at Thomas Cook Cuts

The European hotel association Hotrec is considering legal action against Thomas Cook, one of Europe’s two big tour operators, which owns half of the Nordic outbound travel industry. A sudden decision by Thomas Cook to cut its payments to hotel operators in holiday destinations such as Spain and Greece by 5% has shocked and angered already cash-strapped hotels. This has prompted Hotrec to condemn the move as “unfair, unwarranted and amounting to a breach of contracts”.

Since a series of mergers in 2007, Thomas Cook has been one of the “big two” operators together with TUI, rapidly reducing competition in the industry. It is abusing its market dominance by threatening to withdraw future business, the hotel association says. However, Thomas Cook argues that it has been forced to controversially cut payments to hotels because of the severe knocks it has been forced to endure during 2010, such as the volcanic ash crisis and the impact of austerity measures on people’s ability to travel.

The ash-cloud crisis alone on the suspension of flights has cost the company £82 million (). The operator says it assumes that hotels would rather accept the 5% cut in payments than to see cuts in capacity, which Thomas Cook says is the only possible alternative. The Spanish Confederation of Hotels and Tourism, Cehat, is also considering legal action against Thomas Cook.